The Windfall Elimination Provision (WEP) is a federal law, created in 1983, that reduces Social Security benefits of retirees collecting a pension from a job not covered by Social Security. Retired public employees – including firefighters, police officers and teachers – make up the bulk of the 1.9 million Americans now impacted by WEP.
At times the WEP is also despairingly referred to as the “double dipping” law. This is a misnomer, because public retirees who are impacted by the WEP paid into both Social Security AND their public retirement system. These retirees paid for and earned BOTH benefits.
Retirees receiving Social Security benefits that have been reduced by the WEP did work under Social Security, earning a minimum of 40 quarters required to qualify for Social Security benefits. However, because they also worked in a non-covered job outside of Social Security and are receiving a pension based on that work, their Social Security benefit is reduced.
The WEP formula can reduce a retiree’s Social Security benefit by as much as $465 per month, with the reduction for many public retirees averaging $400 a month or $4,800 per year!
While the minimum number of quarters needed in order to qualify for Social Security is 40 (10 years), retirees having spent a full 35 year career paying into Social Security amass at least 120 quarters under the federal program.
The Windfall Elimination Provision (WEP) is a federal law that reduces Social Security benefits of retirees collecting a pension from a job not covered by Social Security. Retired public employees – including firefighters, police officers and teachers – make up the bulk of the 1.9 million Americans now impacted by WEP. There are 27 states that have public retirees and employees who could be hurt by either the GPO/WEP. The first seven states listed below have almost all or a large majority of their public employees not contributing to Social Security, and, therefore, potentially affected by these laws as retirees. The remaining 20 states are ranked in terms of the percent of employees who may be impacted (66-16%). They are: California, Texas, Colorado, Illinois, Massachusetts, Louisiana, Ohio, Texas, Florida, New York, Nevada, Connecticut, Kentucky, Minnesota, Georgia, Missouri, Michigan, Tennessee, Wisconsin, Washington, Indiana, Pennsylvania, Alaska, Maine, Hawaii, Montana, New Mexico and New Hampshire.
As of December 2018, nearly 1.9 million people (or about 3% of all Social Security beneficiaries) were affected by the WEP across the United States. (Congressional Research Service, MA 2019)
In order to qualify or be eligible for Social Security Retirement, you must meet two conditions.
- Be at least 62 years of age.
- Earned no less than 40-quarters (10 years) of Social Security credits. You earn quarters by paying FICA taxes into the Social Security system.
Anyone NOT 62 years of age and without at least 40 quarters of payments into Social Security is NOT eligible for Social Security. Learn more about Social Security eligibility from sea.gov by clicking here.
Please note, spouses of Social Security beneficiaries may also qualify for spousal Social Security benefits. However, public retirees may also be subject to the Government Pension Offset (GPO).
The federal WEP law reduces Social Security benefits for more than 1.9 million public workers, including teachers, fire fighters, police officers and other public servants. These retirees earned pensions from retirement systems not covered by Social Security and are subject to the WEP (unless they meet certain exemptions, info on which can be found here). We should note that the number of public retirees impacted by the WEP continues to grow as employees retire, with nearly 2 million retirees now affected.
There are 27 states that have public retirees and employees who could be hurt by either the GPO/WEP. The first seven states listed below have almost all or a large majority of their public employees not contributing to Social Security, and, therefore, potentially affected by these laws as retirees. The remaining 20 states are ranked in terms of the percent of employees who may be impacted (66-16%). They are: California, Texas, Colorado, Illinois, Massachusetts, Louisiana, Ohio, Texas, Florida, New York, Nevada, Connecticut, Kentucky, Minnesota, Georgia, Missouri, Michigan, Tennessee, Wisconsin, Washington, Indiana, Pennsylvania, Alaska, Maine, Hawaii, Montana, New Mexico and New Hampshire.
Yes, the WEP law has also been referred to as the “Double Dipping” law. However, that name is misleading and insulting to those public retirees who worked under Social Security, paid their payroll taxes into the Social Security system and earned their own Social Security benefit. All retirees should receive what they paid for and earned.
The WEP (and GPO) was a minor provision within the Social Security Reform Act of 1983, which was signed into law on April 20, 1983 by President Ronald Reagan. At the time, Democrats controlled the US House of Representatives and Republicans governed the US Senate. The law’s passage was championed as a great bipartisan compromise that restored fiscal stability to Social Security for generations to come.
Public retirees and employees eligible, who were retiree before July 1, 1985 were grandfathered and held harmless from the WEP.
In brief, yes the WEP and GPO laws are both legal under federal law. Congress, through the passage of federal law, sets the rules governing Social Security benefits.
Social Security is a federal program created by Congress and signed into law by President Franklin D. Roosevelt in 1935. The program is funded exclusively through employment or payroll taxes (FICA, the Federal Insurance Contributions Act). FICA was also created in 1935 as the federal tax mechanism to fund Social Security. The tax was later expanded to include Medicare and Medicaid.
In total, the FICA tax rate works out to 15.3%, with most Americans responsible for 7.65% if they’re not self-employed.
- Social Security tax responsibility: 6.2% each for you and employer up to $127,200 in wages in 2019 (wage cap is indexed to inflation).
- Medicare tax responsibility: 1.45% each for you and your employer (with no income limit).
- Medicare surcharge tax: 0.9% just for the employee on wages over $200,000.
Social Security is a federal program funded by federal taxes (FICA Tax). The benefit rules and eligibility are established by Congress as part of federal law. Unlike our contributions to defined benefit pensions, 401K retirement funds and other private investments or savings accounts, Social Security contributions are legally federal taxes and not considered personal property. Like most other federal programs, Social Security benefits are subject to change by an Act of Congress.
Therefore, the only viable relief from WEP is through Congressional action to change the law.
No. Joining Social Security would not correct the situation for current retirees. In fact, mandatory Social Security would make matters worse for both retirees, employees and the taxpayers. Public employers presently not covered by Social Security cannot afford to fund pension benefits at current levels, while also paying 6.2% of an employee’s salary into Social Security.
Likewise, today’s public workers also cannot afford to contribute at current levels toward their retirement, while also paying 6.2% into Social Security. For example, in Massachusetts teachers contribute a flat 11% into the Teachers Retirement System. Most state and municipal employees contribute and average of 10%. Mandating enrollment into Social Security would increase those individual contributions to 16-17% on average – rates that are unaffordable for most public workers.
It should also be noted that when Social Security was created in 1935, public employees were legally prohibited from participating. As such, public employers were forced to create their own public retirement systems. In the 1950s federal law was changed to allow public employers to enter Social Security. However, by that time many states and local communities already had well established pension systems of their own.
For the past 36 years multiple attempts have been made to fully repeal both the WEP and GPO. Despite the best of intentions of the bill sponsors, not a single repeal bill has ever advanced beyond the Congressional committee level.
Simply put, national support and the majority votes needed in Congress and the 60 votes required in the U.S. Senate do not exist.
In addition, full repeal of WEP would result in some public retirees receiving greater Social Security benefits than what they actually earned. This is the inequity that Congress sought to correct in 1983 with the passage of WEP. However, we now know that the WEP law overcorrected and reduces Social Security benefits beyond what was intended. The current law is unfair and must be reformed.